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Bitcoin (BTC -0.39%) seems unstoppable right now, after breaking through the $30,000 price point. The world's most popular crypto really appears to be separating from the pack, and is now up 85% for the year. Regulators seem like they're willing to leave it alone and the Federal Reserve looks like it might be finished tightening. All are very good reasons Bitcoin sentiment right now is overwhelmingly bullish.

However, there is one issue that has been dogging Bitcoin for years, and that's the environmental impact of Bitcoin mining. Increasingly, Bitcoin is being included as part of the global climate change agenda, and that is going to impact not just how investors perceive it, but also how regulators around the world view it.

Over the past 12 months, the case against Bitcoin on purely environmental and climate change grounds has been ramping up. In September 2022, the White House put out an official report detailing the energy consumption of different cryptocurrencies, and Bitcoin figured prominently in the report.While modern proof-of-stake blockchains are remarkably energy-efficient, older proof-of-work blockchains such as Bitcoin are not.

Image source: Getty Images.

And that's not all. Greenpeace recently launched a new advertising campaign against Bitcoin called "Change the Code, not the Climate."The goal, says Greenpeace, is to clean up Bitcoin. And it will use many of the tactics that it has brought to bear against the oil and gas industry to make its point. For example, in March, Greenpeace placed a giant, 11-foot "Skull of Satoshi"(named for Satoshi Nakamoto, the anonymous founder of Bitcoin) right next to the New York City offices of Fidelity Investments, which now offers Bitcoin options for retail investors.

On April 9, The New York Times published a controversial expos on just how bad Bitcoin is for the environment, focusing on the energy consumption of Bitcoin mining. While many in the crypto community panned the article as being biased and factually inaccurate, the big-picture view is that climate change is a very important issue right now, and a lot of people -- including some lawmakers and regulators -- are very passionate about it.

As I see it, there are two possible scenarios. The most likely scenario is that Bitcoin manages to shake off this controversy once again, as it has over its 14-year history. Years ago, economists and academics were publishing the same kinds of reports, and what has really changed? Yes, Bitcoin miners have embraced cleaner forms of energy, but Bitcoin shows no signs of changing its proof-of-work protocol that requires crypto mining. And even the Canadian artist who created the "Skull of Satoshi" artwork has now recanted after tremendous blowback from the Bitcoin community.

But I think something fundamentally changed in September 2022. That's when Ethereum transformed from a proof-of-work blockchain into a proof-of-stake blockchain, immediately reducing its energy consumption by 99.99%. If Ethereum can do this, why can't Bitcoin? That's what makes the current Greenpeace ad campaign more effective than it might have been several years ago. When it talks about "changing the code," it's talking about changing from a proof-of-work blockchain into a proof-of-stake blockchain. Whatever you might think about Greenpeace, that doesn't seem like a radical, unreasonable request.

Moreover, big institutional investors such as BlackRock may have boxed themselves into a corner on this issue. BlackRock has been at the forefront of the environmental, social, and governance (ESG) investment agenda, and has pushed for greener, more sustainable investments.So how does that square with a policy of embracing Bitcoin, which is arguably the least green crypto that exists?

That being said, Bitcoin is clearly the top crypto investment on the planet right now. It's hard to make a case for any other crypto when Bitcoin is up 85% for the year. So I'm not trying to throw cold water on a scorching-hot Bitcoin rally. I hold Bitcoin in my portfolio, and I'm bullish that it can hit some pretty outrageous price targets in the future.

But I'm also a realist. Look at the automotive industry, for example. Once activists decided to take it on, things forever changed. Is it possible to watch TV these days without seeing ads for electric vehicles? Right now, there are plans in California to ban gas-powered vehicles by 2035, and the EPA just proposed rigorous new emission standards for vehicles.You can't simply ignore an issue, and I'm concerned that some people in the Bitcoin community have their heads in the sand when it comes to climate change.

Bitcoin is a fantastic long-term investment. But if you start to see the narrative about Bitcoin change, it's worth taking note. Any hint of legal or regulatory overreach on this issue in the U.S.should be a wakeup call for Bitcoin bulls because it might just be the only factor that can squelch the current Bitcoin rally.

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